Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
4.4.7 Forbearance
Rabobank has developed a policy for monitoring its clemency
portfolio every quarter. This portfolio consists of the customers
of Rabobank for whom forbearance measures have been put
in place. The measures under that name comprise concessions
to debtors facing or about to face difficulties in meeting their
financial commitments. A concession refers to either of the
following actions:
A modification of the previous terms and conditions of
a contract the debtor is unable to comply with due to its
financial difficulties ('bad debt') in order to allow for sufficient
debt serviceability. A modification that would not have been
granted had the debtor not been in financial difficulty.
A total or partial refinancing of a bad debt contract, which
would not have been granted had the debtor not been in
financial difficulty.
Examples include postponements of repayments and
extensions of the term of a facility. The rationale for the focus
on this portfolio derives from the concerns of European
regulators about the deterioration of the quality of the portfolio;
it is feared that forbearance measures might camouflage this
deterioration of the portfolio as debtors are able to meet
their financial obligations for longer periods as a result of the
concessions. The identification of forbearance measures for
the corporate portfolio is based on the current Loan Quality
Classification framework, with forbearance measures only
applying to the classified portfolio. If forbearance measures
are applied to a debtor, the debtor falls, by definition, under
the supervision of the Special Asset Management department.
Lastly, items in the forbearance category must be reported on
for up to two years after their recovery from 'non-performing'to
'performing'. This period of two years is referred to as 'Forborne
under probation'.
4.4.8 Trends in the real estate portfolio
Rabobank's portfolio of commercial real estate in the Netherlands
is managed by FGH Bank and the local Rabobanks.
The commercial real estate market showed some signs of
recovery in 2015. The demand of real estate users for offices and
business premises increased slightly, although it remains low
from a historical perspective. The supply of empty buildings is
decreasing, both for offices and retail space.This is not the result
of an increased growth in demand, but is due to a combination
of two factors: extra initiatives to convert vacant buildings;
and low levels of new housing development. However, rental
prices are still under pressure in areas outside core locations in
large cities. This has led to an increasingly visible demarcation
between hopeless, disadvantaged and high potential properties.
Long term trends such as demographic ageing, the 'New Way
of Working'and online shopping are all important factors in this
development.The pressure on retail property will continue for
the coming years, in particular causing difficulties for mid-market
retail chains. This is in contrast to the positive demand on the
investment side, in which there is significant activity from both
domestic and international investors. Low interest rates and
limited returns on other investment segments are stimulating
investments in real estate. All real estate segments are in demand
among investors. Under the current market conditions, the
quality of the commercial real estate portfolio is showing signs
of stabilisation, especially in the second half of the year, whereby
the afore-mentioned division in the market shows differences at
sub-sector level.
Within Rabobank Group, more attention has been paid to
the management of the commercial real estate portfolio in
the Netherlands. Steps have already been taken in recent
years to tighten the financing, revision and appraisal policies.
At the beginning of 2015, within the context of One Rabobank,
a vision that will see the bundling of Rabobank's activities to
create optimal customer service, it was disclosed that FGH Bank
would be integrated with Rabobank as a centre of expertise.
The preparations for this process are in full swing.The table
provides insight into the commercial real estate loan portfolio in
the Netherlands on 31 December 2015.
The Property Development segment is presented separately.
The lending by Rabobank in this sub-sector was relatively low
with EUR 1.9 billion (2014: 2.3).
The commercial real estate portfolio of Rabobank in
the Netherlands fell again in 2015. This was mainly due to
repayments, disposals/write-downs, the sale of loans and
a lower risk appetite.
Gross non- Loan
Net loan performing impairment
in millions of euros portfolio loans Provisions charges Write-downs
On 31 December 2015
Investment property of domestic retail banking business 7,729 1,447 588 (8) 105
Investment property of property segment 13,794 3,614 1,040 142 217
Total investment property 21,523 5,061 1,628 134 322
Property development of domestic retail banking business 784 495 301 26 83
Property development of property segment 1,101 172 62 5 1
Total property development 1,885 667 363 31 84
199 Notes to the consolidated financial statements
